oecd. Private focs. uk cl courts

 The UK regulators 

the Office of Communications (‘Ofcom’), the Gas and Electricity Markets Authority (‘Ofgem’), the Northern Ireland Authority for Utility Regulation (‘NIAUR’), the Office of Rail Regulation (‘ORR’), the Water Services Regulation Authority (‘Ofwat’) and the Civil Aviation Authority (‘CAA’). 

THE COURTS

These courts have jurisdiction to hear competition law cases:

  • the CAT
  • The ‘ordinary courts’ :
      • the Chancery Division of the High Court of England and Wales
      • the Court of Session and Sheriff Court in Scotland
      • the High Court of Northern Ireland

Deciding which court is right will depend in part on the type of action being brought and the type of relief sought. For example, if an injunction is sought, a claimant must go to the ordinary courts.

The CMA is both a competition authority (decision making only) and a consumer authority. under consumer law we have a prosecutorial role, rather than a decision-making role.

The competition decisions made by the CMA (and its concurrent Regulators) may be appealed in the first instance to the (CAT). the CAT can make its own decision in competition cases. Notably, the CAT’s three-person tribunal will typically include an economist….Appeals of CAT judgments (on points of law only) pass to the non-specialist CA(Court of Appeal) and ultimately to the House of Lords (UK’s Supreme Court).

TYPES OF PRIVATE ACTION

1/Standalone action (SAC). 

This is where a claimant articulates and establishes before the CAT a stand-alone infringement, and claims damages (or an injunction) arising out of that infringement.  the stand-alone action may incept independently of any public enforcement; or it may operate in parallel; or it may – slightly naughtily, in my view, try to “piggy-back” on public enforcement that is either anticipated or on-going.

A standalone action is a claim brought where the alleged breach of competition law is not already the subject of an infringement decision by the European Commission or CMA (or, where an CMA decision has been appealed to the CTA or a EU). If there is no such decision, is a stand alone action and the claimant will need to prove the breach. 

All standalone actions must be brought before the ordinary courts. The Competition Appeal Tribunal has no jurisdiction to hear standalone actions.

2/The FOC.

This is where a claimant seeks damages arising out of an infringement that has already been established by a regulator (CMA) and various “sectoral” regulators, like Ofcom. In the case of such claims, it is not possible to originate new allegations of infringement. You have to work with what is found in the decision being “followed”.

Where a breach of competition law has already been established in an infringement decision taken by the CMA or the EC, the claimant can rely on the decision, so does not need to prove the breach.

Follow-on actions in the ordinary courts

Where a claim relates to the same facts and parties as an infringement decision taken by the CMA, the decisions are binding on the ordinary courts, so a claimant can rely on them in the ordinary courts to prove the breach of competition law and findings of fact, and will need to prove only that the breach caused him to suffer loss. Where a CMA decision does not relate to the same facts, it will not have the same binding effect on the court, but may be relevant – for example if it concerns the same market but different parties – and it may still be admitted as evidence.

Follow-on actions in the CAT

The CAT is bound by infringement decisions of the CMA. This means that a claimant relying on such a decision need only prove that the infringement caused him to suffer loss.

3/ (Representative/class/collective) Actions (CP)

Follow-on actions for damages may also be brought before the CAT by a body representing a number of consumers. Such actions are intended to facilitate claims against a defendant where a large number of consumers have suffered similar losses, but where each loss is too small for an individual claim to be worthwhile. This might happen where a large number of consumers have each been overcharged a relatively small sum as the result of a cartel. A representative action may be brought only by a ‘specified body’ appointed by the Secretary of State, such as Which?, and only on behalf of named consumers. This means that a consumer will be included in the action only if he expressly agrees to join, or ‘opts in’.

CP is a claim that may – confusingly – either be follow- on or stand-alone, where a class of claimant is represented by a class representative who brings the claims on behalf of that class, who either opt-in or opt-out. Collective proceedings – unlike individual claims – cannot be brought as of right, but require the permission of the CAT. collective actions are those actions that cannot efficiently be brought by the individual. The individual costs of enforcement dwarf the damages recoverable by the individual. Pool the claims, and pretty soon you are talking “real money” in terms of the claim, and only a marginal increase in the costs of bringing it. But the interest of the individual claimant is by definition less; and we all know that these claims are driven by class representatives, funders and claimant-sided legal firms. That is not a criticism – it is a recognition of reality. And, to be clear, it is a reality that the CAT welcomes because there is a public interest in the private enforcement of competition law. 

In ALL types of claim, the claimant will also have to prove:

  • that the breach caused them loss
  • that it would not have occurred ‘but for’ the competition breach
  • that the type of loss was reasonably foreseeable.
  • If the claim is for damages or monetary relief, will also have to prove the amount of loss.

TIME FOR BRINGING A CLAIM

  • Claims for competition breaches in the ordinary courts must be brought within six years (five years in Scotland) of the date the claimant suffered loss, although there are some exceptions.
  • Follow-on damages actions in the Competition Appeal Tribunal must generally be brought within two years from the latest of: the date on which the period for appealing against the European Commission or OFT infringement decision12 relied on expires; when any such appeal has been determined; or, if the claimant does not suffer loss until after this date, two years from when the loss is sustained.

RELIEF AVAILABLE

There are three main types of relief available to a successful claimant:

  • damages
  • an injunction, and
  • a declaration.

A claimant may be awarded more than one type of relief . the type of relief depends on the type of court.

Damages

Damages are intended to provide financial compensation for the loss the claimant suffered. A claimant will need to prove the amount of the loss they suffered. For example, in order to calculate their loss, someone harmed by a cartel would have to compare the price they were in fact charged with the price they would have been charged if the cartel had not existed. It may also be possible to claim for lost sales if the claimant can show he has lost sales as a result of the higher price he was charged. A claimant can also seek interest on any grant of damages.

Injunctions

An injunction (not available in the CAT) is an order requiring the defendant to take steps to bring certain actions or omissions to an end (or requiring the defendant to do something positive, for example, to supply goods or services). for example where a claim relates to the terms of an ongoing supply agreement or an unlawful refusal to supply goods or services. The granting of an injunction is within the court’s discretion, so a successful claimant has no automatic right to an injunction.

The ordinary courts may grant an injunction in cases where the claimant cannot be compensated adequately by damages alone. a claimant can also seek an interim injunction for a breach of competition law. This requires a defendant to take certain action pending the full hearing of the case. Interim injunctions are typically granted where there is a risk that the claimant will suffer irreparable harm by the time the trial comes to court (for example, a risk that the claimant will go out of business as a result of the alleged anticompetitive behaviour). The court will not grant an interim injunction unless it is satisfied that:

  • there is a serious case to be tried, and
  • if the injunction is later found to have been wrongly granted, the defendant can be adequately compensated by damages for the inconvenience of complying with the injunction.

     

Declarations

The ordinary courts have the power to make a declaration that a certain agreement or conduct is anticompetitive. For example, the court might declare that an agreement (or part of an agreement) is in breach of competition law and therefore unenforceable. A declaration may be available in conjunction with other remedies.

Costs

Both the ordinary courts and CAT have wide discretion to award costs, for example, lawyers’ costs and the cost of expert witnesses used in preparing evidence. in the ordinary courts the losing party will be ordered to pay the costs of the successful party. However, the court may take a number of factors into account when deciding what (if any) costs order to make, including the parties’ conduct in the case and any attempts to reach a settlement.

CAT’s FTC can give capped cost orders.

Dispute resolution

There are many options for resolving disputes without going to court, including for example mediation, adjudication and arbitration. or Private settlements can often result in the best outcome for both parties and reduce both parties’ costs.

 

PRIVATE CL ENFORCEMENT

private antitrust enforcement is an important complement to public enforcement to improve the effectiveness of competition

However, private enforcement can impose unnecessary costs on society, in particular when poorly designed rules result in excessive litigation and discourage pro-competitive conduct.

in many European countries restrictive rules concerning discovery of documents
discourage potential plaintiffs from bringing cases for damages in competition matters. Some
countries, such as Norway, reported that they are experimenting with rules that allow some form of discovery in order to provide more support for plaintiffs. At the same time, participants
recognized that excessive discovery requests impose enormous burden on parties and the litigation system and may interfere with the goal of ensuring a just, speedy and inexpensive court experience. 

in the uk, cl pre-trial discovery has significantly increased

Standing and the Assessment of Damages:

no consensus exists on cl locus standi.

some believe that actions by indirect purchasers can help  effective enforcement regime and should not be restricted.

 “indirect purchaser action” and “passing on defence,” the antitrust injury doctrine.

factors to determine standi of indirect customers and whether a passing on defence -POD- should be allowed in direct purchaser suits:

  •  optimal deterrence,
  • effective compensation, and
  • efficient administration of justice.
  • Reconciling these
  • difficult trade-offs and balancing.

we should allow standi to indirect consumers, because :

a. direct consumers sometimes have no incentive to sue (because they passed on higher prices) or were more concerned about their ongoing business relationships with suppliers than about their right to seek damages;

b. there has not been a single case in the United States in the past 30 years where multiple damages had been awarded to several groups of plaintiffs that could sue in federal and state courts.

in most jurisdictions indirect consumer standi is allowed, but they rarely claim as proving their case is difficult.

also,  defendants should be given standi to POD, as otherwise, direct purchasers could be unjustly enriched.

the antitrust injury doctrine -AID- could play an important role in ensuring that private incentives to sue for damages are aligned with the cp goals. AID tells us whether a plaintiff has suffered the type of harm that cl intend to prevent.

If indirect consumer claims -ICC- are allowed [standi to sue for damages], rules should be in place to coordinate multiple law suits;  ICC make sense only if rules exist to aggregate a large number of individual claims (class action)

The theory of optimal deterrence -TOD-:  cl damage awards should reflect the net harm caused to consumers, plus social cost, with a multiplier in the case of concealed offenses such as cartels, to reflect the likelihood that the offence would be detected. The multiplier could either be a fixed multiplier, such as treble damage awards in the United States, or other mechanisms to ensure that damage awards exceed pure compensation, such as
the award of pre-judgment interest or exemplary damages that can be awarded in the discretion of the court.

there is no empirical evidence that damage awards, even in combination with public fines, has ever yet reached a level where they would be considered an optimal deterrent…..we need to ask for more!… Without multipliers [when damage awards are limited to actual losses], firms would feel an incentive to engage in unlawful conduct so long as they can expect that they will not always get caught.

private action + public action [cma.ec], should jointly contribute to an adequate multiplier

Thus, the fact that public fines already have been imposed on defendants cannot eliminate the need for private actions for damages, to ensure optimal levels of deterrence.

Available evidence suggests that even public fines and private damage awards combined regularly do not reach a level at which they would be enough optimal deterrent… concerns, by some, of multiple damage awards are unjustified as there is not a single reported case in which multiple damages had been awarded.

multiple [that exceed pure compensation] damage awards can be sought using:

  • a U.S.-style treble[multiplier] damages.
  • award of pre-judgment interest
  • exemplary damages in the discretion of the court,
  • special rules concerning litigation costs.

Class actions, collective actions, or other forms of actions that allow the aggregation of a large
number of small claims for damages is crucial to effectively deter anticompetitive conduct.

in class actions, the focus shifts from clients to lawyers, from damages to
attorney’s fees, and from litigation to settlements.

for class actions to happen, rules must give incentives for lawyers/counsel to litigate, including contingency[nwnf] fees

As individual damage claims of class members can be small, other mechanisms to distribute
damage awards could include coupon settlements; or A cy pres approach [where
the court decides to give the award to a charitable organization or some other public interest
organization, rather than individual plaintiffs].

The Interface between Public Enforcement and Private Enforcement:

should cma.ec provide evidence they hold, to courts, to assist in private litigation?

could private actions for damages undermine the effectiveness of leniency programs?

yes….However, any assistance to courts and private plaintiffs must be carefully weighed against the risk that the sharing of evidence could interfere with the cma.ec’s investigation….if so, cma.ec will resist disclosure, particularly to protect information provided in
leniency applications

the usa does not allow private parties or courts to seek docs from antitrust agencies [have investigatory privilege]

private actions for damages should not create a disincentive for firms to apply for leniency… But how far a competition regime should go in limiting a leniency applicant’s exposure to civil liability? depends on the jurisdiction.

THE COORDINATION OF PUBLIC AND PRIVATE ANTITRUST ACTIONS
by Richard A. Epstein*

1. Tort and Crime: The Basic Coordination Dilemma

The overlapping jurisdiction of the criminal and tort law is real…why?:  the state has the power to punish and restrain, and individuals have the right to reparations.

elimination of all wrongful conduct can cost more than the harm inflicted…..Too much of a good thing turns out to be a bad thing, just as too little of a good thing turns out to also be bad. Overdeterrence is as bad as underdeterrence, for both lead to a suboptimal allocation of resources…It is no better to spend only $10 to combat a $100 expected loss than it is to spend $100 to combat a $10 expected loss.

When the litigation ventures beyond ordinary street crimes into regulatory offences… In the first place, the potential offenders usually have substantial resources so that
private actions against them are perfectly viable. In addition, public bodies
can not only use criminal sanctions but also regulatory actions like cease and desist orders and fines, with burdens of proof that are lower than the beyond the reasonable doubt
standard in criminal law.

The conduct may involve intentional wrongdoing, but it may also involve strict liability. At this point, the question of how to coordinate private and public actions becomes truly critical because both forms of behaviour are in play at the same time.

90 percent of enforcement activity in the United States is on the private side in comparison with only 10 percent private enforcement in the EU.

suppose that one decided that in both systems public and private actions should be set at 50 percent each.

Coordination in Competition Policy

Multiple Private Actions

a cohesive cartel may be able to resist cheating, and in cases of many natural resources new entry is hard to come by: if all the potash in the world is mined in two or three places, the cartel could operate for a long period of time under a regime whose sole sanction is the withdrawal of contractual support.

That view is supported by recent revelations of a bid-rigging scheme that reached the highest levels of the insurance industry, involving not only price-fixing but sham bids and other frauds on customers.

In response to the durable nature of at least some cartels, it is common for legal systems to
develop sanctions that allow actions by private parties who are injured by the pricing policies, often with treble damages that act as a huge spur to additional suits. 

One of the most difficult issues in ordinary tort cases with physical injuries is the question of
multiple causation, which can arise in pollution and various cumulative trauma cases, such as those involving asbestos. But the frequency and severity of multiple causation issues are still more acute in financial and business matters because the ripple effects occur much more quickly. Raise prices to one customer, and the consequences quickly spread through the economy… Hence, the “privity” rule is attractive because it allows the initial buyer to sue the wrongdoer for the full loss , thus denying any claim to persons further down the chain.

The savings in administrative costs, coupled with the improvement in deterrence, justifies a deviation from the principle that each person should recover for the precise extent of his or her wrong. The privity rule first took hold in cases involving regulatory overcharges and has spread its way to the antitrust law, at least in the United States, in two well known decisions.

Hanover Shoe, Inc. v. United Shoe Machinery Corp. held that the defendant in a price fixing case could not set off against the overcharge any recoupment that the plaintiffs had recovered from their customers.

Illinois Brick Co. v. Illinois held that indirect purchasers could not bring suit for their injuries.

The location of all actions in the hands of the immediate purchaser vastly simplifies the entire enforcement scheme.

however… there is an alternative solution: to allow class actions by all individuals at each step in the chain of distribution. Thus, the immediate buyers could form one class against the cartel, and sub purchasers could form another, and so on down the line. both meet the standards of commonality…. But the dual actions, raise serious questions of coordination between private actions 

CPD

These situations are further complicated by the [ claim preclusion doctrine CPD = collateral estoppel CE].

The older view of mutuality was that a litigated decision on a question of fact between two parties was only binding on the two parties in some subsequent action between them. The judgment itself had no third party effects on plaintiffs laying in wait to sue, or on
potential defendants faced with the risk of suit. The rule which allows [defensive collateral estoppel [DCE] = to block a plaintiff who has already lost] is not an issue since that party has a choice of forum and an ability to disengage at any time before judgment. So it is the second half, the offensive collateral estoppel [OCE] against the defendant who lost in the first case, that is critical.  The mutuality rule blocked most of the strategic efforts of third persons to game the OCE system. Any suit between A and B had effects only between A and B. All third persons can also claim….cases moved in parallel but in separate universes.
but his older mutuality principle failed to take advantage of an obvious efficiency. If the first suit were fully and fairly tried, its results could be imported into subsequent
cases raising the same issue in order to save on litigation costs….

however, no one will accept that a party will be bound by a trial in which he did not participate…

One possible response is to fight harder in the first case because there is more to lose, given the risk of  focs. A second response is to settle the first case in order to eliminate that follow-on effect….

The two effects run in opposite directions for the opposing party in the initial litigation. The former [to fight] makes it more likely that the first plaintiff will lose because the defendant will invest more resources in staving off an adverse judgment that costs him more than the plaintiff could gain.  it is as though the plaintiff is suing for $1,000 and the defendant is defending a suit worth $1,000,000. We know who will invest more in litigation.

The second effect [to settle] makes it more likely that the defendant will pay higher sums to be rid of the initial lawsuit, given that it will slow down the suits that follow. It as though the plaintiff collects $500 while the defendant jettisons $500,000 in potential
liability.

In the United States, certain districts are “problem” districts in which defendants face hostile judges and juries on a wide range of issues. If these initial judgments have consequences for unrelated lawsuits, the influence of these districts will be magnified in overall litigation.

Note that the reverse strategy will not work because the defendant who receives a favourable judgment cannot use that judgment against a different plaintiff in another case, even
if the two plaintiffs are represented by common or affiliated counsel.

This is why the litigation over jurisdiction, venue, removal and the like are so critical to modern class litigation: Where a case is tried is even more important than the legal theories on which it is tried.

there is an incentive to join a class action to get a once and for all settlement, often on the basis of a nation class, whose use would be resisted if the case were set for trial.

is it good or bad, the huge administrative savings from the “offensive” use of a prior judgment against an earlier defendant ?…is an open question

The Coordination of Public and Private Litigation:

is all about private parties seeking to piggyback [foc] on public litigation…..rarely if ever, is there any public litigation that follows private suits….why?:

1- the burdens of proof in public litigation are typically higher than those in private litigation. Hence, the favourable private judgment could not be used by the cma.ec 

2- The typical government usually does not wish to FOC … where matters of principle do get raised in private lawsuits, govs can submit amicus curiae briefs on appeal, to express its own view of the case. For example, in Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, LLP: usa gov (doj) intervened in a private lawsuit when it perceived that a successful plaintiff’s verdict could undermine the authority of the FCC. Indeed, in my view,
usa gov (doj) should urge the Supreme Court to review cases on general antitrust policy…the doj is failing to urge the Supreme Court to reconsider cases that had profound implications for private antitrust actions

so..is all about private actors laying in wait [to foc] for gov to win.  where gov loses or settles a case, the private parties can still continue without prejudice, at least if the plaintiffs have guarded against the risk of the statute of limitations. In those cases where the government wins, the follow-on effects are easy to establish. No one questions that any litigation against the government is of major importance

Once there is an effort to decouple private suits from government action, the question arises
whether there are sensible ways to effectuate this partition. The government could decide not to allow its original legal or administrative proceeding to be used in subsequent litigation brought by private plaintiffs.  government is more willing to bring suit now that it can limit its collateral consequences in subsequent private litigation. The private parties who are excluded have no independent right to use the prior judgment any more than they have a right to demand that the government bring the suit. Hence, if the government can take the greater remedy of refusing to prosecute, it should have available the lesser remedy of limiting the consequence of a favourable judgment, restoring the old mutuality rule [= the separability of parties]

but not all private lawsuits in the United States are parasitic on previous suits that have been successfully concluded by government. In many cases, the plaintiffs do not wish to wait for the government to initiate action. This is especially true in cases of recent revelations
of systematic wrongdoing amenable to class actions. The earlier a plaintiff’s lawyers
are able to file a suit, the greater the likelihood that they will be able to control, or at least participate in, the conduct of the class action.

Government to Government Interactions:

The best solution is to allow each sovereign to decide on the mix of public and private remedies for its own citizens. Implementing this program requires extensive communication and dialogue, as well as respect for territorial differences.  the enormity of the stakes at play, gives good reason to strengthen cooperation of competition policies both across and within nation states and larger alliances and communities.

SUMMARY OF DISCUSSION

optimal deterrence.

 difficult to determine the ratio of resources that should be spent by public and private parties to prevent harm

the elimination of all wrongful conduct could easily cost more than the harm that it inflicted.

Over deterrence was as much a social problem as under deterrence, as both lead to a suboptimal allocation of resources. The costs of over deterrence were more difficult to
observe. For example, firms might be reluctant to engage in innovative arrangements for fear of antitrust liability.

Introducing a private enforcement system on top of an already optimal public enforcement system would likely lead to over deterrence. If there were some areas where private enforcement was more efficient that public enforcement, the private side would have to be increased, and the public enforcement should be reduced.

But the U.S. experience showed that once public enforcement agencies had
a large budget, it was very difficult to reduce public enforcement. Indeed, there was very little
coordination between private and public enforcement in the United States.

Under the old rule of mutuality, a litigated decision had been binding only on the two parties of the suit. Third parties were not bound by, and could not use the initial judgment in a subsequent action. The old rule had been relaxed in the name of judicial efficiency: Under the current rule, if a party was defeated in the first action, the adverse judgment could be used against it in a FOC. 

WHY ARE PRIVATE CL ACTIONS MUCH MORE NUMEROUS IN USA?:

• Access to courts: The study noted that restrictions on standing could be relaxed to facilitate
claims for damages. The report also discussed the introduction of collective actions, or claims by consumer organisations or public representatives, and indirect consumers.

• Reducing risks: The report had noted uncertainty about jurisdiction of courts in competition cases and about certain legal concepts, such as the concept of fault and the legal basis for competition law claims. The report also addressed the question of the creation of specialised courts to improve private enforcement, as well as the use of experts before courts. In addition, guidelines on methods of calculation of damages could be considered. Other suggestions included the use of “reasonable” or “equitable” estimations of damages where quantification of damages was difficult or impossible, or using the defendant’s profits as a guide to measuring damages. Another interesting point mentioned in the report was the practice to allow courts to render first a partial judgment on the violation of competition law, and to leave the assessment of damages to a later stage.

• Facilitating proof: The study discussed both the burden and the level of proof. In addition, the
report discussed problems related to obtaining of evidence, including the introduction of pre-trial discovery rules. Other measures included the power of judges to order the production of classes of documents or individual documents, and relaxing the requirements that had to be fulfilled before disclosure of documents was ordered.

• Other incentives: The report discussed the introduction of multiple damages, which in Europe should be less than treble damages. Another interesting idea was the use of defendant’s profits as a guide to measuring damages. Last, the recognition of pre-judgment interest had also been considered a potential incentive for private plaintiffs.
Mr. Paulis emphasized that strengthening private enforcement in Europe could have a number of advantages. More private action could create greater deterrence and greater compliance. Private enforcement could also contribute to the development of a stronger and better competition culture and could bring competition laws closer to consumers. With the right rules, private enforcement could be a multiplier of the effectiveness of substantive competition rules. Last, public authorities could have swings in their enforcement policies, and private enforcement could then also contribute to stronger competition enforcement. Of course, private actions before national courts should be complementary to public
enforcement of EC competition law and it was necessary to coordinate the two enforcement areas.

cost allocation in cl cases is extremely favourable to plaintiffs, contingency fees, and class action procedures.

two aspects to private litigation:

a. actions for damages

b. actions for injunctive relief, normally interim

 under the European system plaintiffs had a relatively high risk in private
litigation and a relatively uncertain reward. The risk/award ratio was therefore not favorable for plaintiffs….however, that there was anecdotal evidence of a substantial number of settlements which indicated that the system worked better than thought.

reasons to improve private cl enforcement :

1- because of the lack of competition culture there was a disconnection between competition law and the people the law intended to protect.

2- administrative enforcement was not always efficient; without private enforcement perhaps in too many cases firms considered that their conduct either would not be detected or would not result in fines.

3- administrative penalties, which were currently the main method of enforcing European competition law, were a blunt instrument since those who suffered from an infringement were not compensated.

4- in the long-run the vigilance of individuals was as important as the vigilance of public authorities. The dynamics of enforcement could be enhanced if weapons were put into the hands of those who were most directly affected by an infringement. On the other hand, promoting a competition culture included some risks, such as the creation of a litigation society and the encouragement of a compensation culture.

in uk, there is some general competition litigation in the High Court, and the Chancery Division had been created to strengthen the expertise among judges who were dealing with competition cases. More fundamental was the creation of the (“CAT”): deals primarily with appeals from decisions of the administrative authorities.

The Enterprises Act of 2002 also conferred jurisdiction on the CAT to hear some damages actions by private parties as follow-on actions….a limited kind of class action could be brought before the cat: A claimant who could establish that it was a representative of a particular class, can bring anaction on behalf of the class; this includs representatives of consumers such as government-recognised consumer organisations. Although no consumer case had been filed, in one case a consumer organisation intervened to represent consumer interests.

In the recent Trinko case, the usa Second Circuit considered whether
indirect purchasers were allowed to bring suit for damages……iow, only AT&T would be allowed to sue Verizon for non-cooperation, or 10 million of AT&T’s customers?…2 caveats:

1-suits brought by disappointed competitors could discourage competition….thus,  There should be a greater distrust about competitor suits, than suits brought by consumers

2-If every disappointed lessee could bring an antitrust action, every private
landlord could be exposed to antitrust actions. One would have to be careful about such an expansion of the scope of antitrust litigation

Unlike the situation in the United States, in ec, the person who had suffered loss is not adequately compensated.

Discovery and Production of Evidence in Private Litigation

1. Discovery of Documents:

What rights do parties have to compel the production of documents held by opposing parties and third parties before a trial?

How specific must any requests be in identifying documents?

What limits apply in time period, geographic area, and range of products subject to production?

What is the role of courts in the gathering of documentary evidence (for example, can courts order the production of documents, and/or issue “protective orders” that limit use or access to sensitive business information)?

On what grounds can the production of documents be refused (for example, on grounds of the
attorney/client privilege)?

What sanctions exist if a refusal to disclose a document is not justified?

Are the procedural rules concerning production of documents in competition cases the same as those that apply to other economic disputes between private parties?

What are risks and concerns associated with discovery procedures? If such risks/concerns exist, what can be done to address them?

Witnesses:

What is the role of expert witnesses in private litigation? Are they court appointed and/or appointed by the parties?

Is cross-examination of witnesses/expert witnesses possible? If not, how can the credibility of
evidence provided by witnesses/expert witnesses be examined?

What is the role of the privilege against self-incrimination in private antitrust actions?

(for example, can the privilege be invoked in civil litigation; can any adverse inferences be drawn where a witnessinvokes the privilege against self-incrimination and refuses to testify; would the privilege apply also with respect to the risk of foreign prosecutions)?

 Competition Authorities and Gathering Evidence for Private Litigation:

What role can a competition authority play in the evidence gathering process for private litigation purposes?

Can a court compel the competition authority to provide information it has on file?

What are the rules concerning private parties’ access to agency files for the purpose of private
litigation?

Can evidence gathering for the purpose of private litigation interfere with possible, pending, or completed public law enforcement?

if the probability of detection were one-half, the fine would be doubled. Under the optimal deterrence model, the probability of detection should be determined separately for
each offense. The probability of detection is less than one primarily for concealable offenses like cartels.

Optimal Penalties and Private Damages

Identifying the optimal penalty does not tell us what sort of system of remedies should be adopted to implement it. One could, in principle, calculate the optimal penalty directly and impose it as a fine. Some scholars have argued that, because antitrust policy is a public good, only public enforcers should challenge antitrust violations and establish the appropriate fine.

A similar position has been voiced in Europe as well. These proposals rest primarily on the recognition that private enforcement creates perverse incentives to use antitrust actions to suppress competition. One must also recognize, however, that public enforcement is not necessarily motivated entirely by the public interest. Others have suggested that
antitrust penalties could be enforced through qui tam actions, in which private attorneys general sue for a bounty, but the amount of the penalty is calculated independently of the enforcer’s award.

These proposals recognize that, from the point of view of optimal deterrence, the penalty imposed and the compensation paid to the enforcer need not be the same.38
The American antitrust laws provide both for public fines and for private sanctions measured by the harm to plaintiffs. The reliance on harm to plaintiffs as the basis for privately enforced sanctions mirrors the standard of net harm to persons other than the offender, but with important qualifications. The largest part of the optimal penalty is the wealth transfer to the offender, which corresponds to the damage to purchasers from the output restriction. But once we move beyond this element of private damages, the correspondence between private harm and the optimal penalty becomes more problematic.

The allocative inefficiency from the violation is a harm to nonbuyers—those who stop purchasing the product because of higher prices; although theoretically a basis for damages, no one, apparently, has ever been able to prove this type of harm in an antitrust case. Equally important, the definition of the optimal standard refers to net harm: it implicitly offsets harms to one group of actors with benefits to another group.

For example, an illegal merger that creates a firm with a dominant market share may injure competitors by making the firm more efficient and allowing it to charge lower (nonpredatory) prices. To award rivals’ lost profits as damages in such a case would represent overdeterrence, because it reflects neither an overcharge nor a social cost. Thus, to make private damages correspond to the optimal penalty, there must be some way to approximate this netting function. Moreover, because the costs of enforcement are social costs, providing
a damage remedy may encourage an unnecessarily costly number of suits.

 the Illinois Brick rule denies recovery to indirect purchasers, even if they paid 100% of an illegal overcharge, and the Hanover Shoe rule, which allows direct purchaser to recover 100% of the overcharge, even if they passed it all on by raising prices. Even when a category of injured parties has the right to sue, they may not, as a practical matter, be the ones to recover the award. Often in class action litigation, the amounts of injury to each class member is too small to justify the costs of distributing a settlement fund, so courts resort to various cy pres distributions to other worthy causes, like schools and libraries.

EC

1. Collective and representative action

ec Green Paper on damages actions for breach of the EC antitrust rules:

a. damages actions aimed at protecting the rights of final consumers: there is an option for a representative action by consumer associations.

b. damages actions aimed at protecting the rights of other groups of purchasers…..there is an option for an opt-in collective action.

 A representative action by consumer associations
The December 2005 Green Paper says there is a merit in fostering claims by final
consumers, because these claims contribute directly to the overarching aims of compensation and increased deterrence, as well as to the development of a competition culture. Costs, delays and administrative burdens, however, discourage consumers who suffer a
relatively minor economic loss from starting a damages action. solutions:

a. the European Small Claims Procedure

b. representative action by consumer associations or other qualified entities.
[ collective consumer actions are unsuitable, as interests of consumers become secondary to other interests (the principle agent problem).

a representative action does not deprive individual consumers from bringing an action if they should wish so.

The interface between public and private enforcement

The Commission is convinced that leniency programmes and rules on antitrust damages claims can be formulated in such a way that they mutually strengthen each other

should successful leniency applicants, also get financial incentives on the civil side (i.e. in national court decisions awarding damages)?

Any diminishing of exposure for the leniency applicant should be at the cost of the other members of the cartel, not at the cost of the victims of the cartel.

The Commission favours direct discovery between parties in national court proceedings of documents submitted by either of the parties to a competition authority in the context of an earlier or parallel investigation by that authority.

Leniency applications are to be protected.

The Commission promotes the idea of giving evidential value to a final infringement decision of a national competition authority. That value could arise from a shifting in the burden of proof or the binding force of an authority decision on national courts.

The relationship between leniency programmes and damages claims:

is necessary to ensure an optimal coordination of public and private
enforcement procedures in order to avoid negative interference between them. That is particularly the case when protecting the effectiveness of the cma.ec leniency programmes

The access to documents held by the Commission:

the principle of transparency is laid down in Article 255 EC, which allows EU citizens and those residing in the EU to have access to the documents of the European institutions. The principle of transparency has been further elaborated in Regulation 1049/2001.3 Persons making an application for access to documents under this Regulation do not have to give reasons for their request and the interest of the applicant is not required.

there is a discovery right: for private litigants to obtain evidence directly from the other parties in the private litigation.

Requests by national courts for access to documents:

the duty of loyal co-operation between the Commission and the Member States as laid down in Article 10 EC. That Treaty provision obliges the Commission to transmit to the national court whatever information is requesting….In its case law, the ecj formulated exceptions:


1- information, transmission of which could jeopardise the interests of the Community or which could interfere with its functioning or independence. It is on the basis of this exception that the Commission announced in its notice on co-operation with national courts that it will only transmit to national courts information submitted by a leniency applicant with the his consent

2- ec must refuse transmission of confidential information, when the national court cannot guarantee its confidentiality.

 The effect of final infringement decisions on a FOC:

According to Article 16(1) of Regulation 1/2003 “[w]hen national courts rule on agreements,
decisions or practices under Article 81 or Article 82 EC which are already the subject of a Commission Regulation 1049/2001 regarding public access to European Parliament, Council and Commission documents…. they cannot take decisions running counter to the decision adopted by the Commission.”….


.…thus, in a subsequent foc before a national court, a claimant can rely on ec’s infringement decision in relation to the same behaviour, as proof of the infringement….focs are still possible following an Article 9 commitment decision….HOWEVER, in a final infringement decision of an NCA, the defendant bears the burden of proving the absence of an infringement.

Limitation periods:

Limitation periods can impose significant restrictions on deterrance and focs.

It is suggested suspending the foc tl (timelimit) from the date proceedings are instituted by cma.ec …. Alternatively, the foc tl could start running after a court of last instance has decided

 settlements 

most antitrust cases settle after discovery is complete or nearly complete so the
parties had a good idea about the strength or weakness of their case. There was also pressure on the plaintiff side to settle, in particular because there was significant investment in the case.

private enforcement [mostly via settlements] is an important component of an effective enforcement system

 

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